Brussels, 17/06/2014 (Agence Europe) - The German economy minister, Sigmar Gabriel (a Social Democrat), said on a visit to the Airbus factory in Toulouse, France, on Monday 16 June that nobody can accept the current deficits but in order to deal with the deficits, growth is needed. One of the solutions for boosting growth, he said, is for costs generated by reform policies to be ignored when calculating deficit figures.
Gabriel said that easing the Stability and Growth Pact (SGP) rules was an agreement to be signed between Brussels and a country promising to introduce reforms. He added that countries that have decided to introduce reforms should be given a little more time to achieve them before having to meet the public deficit criteria.
The idea will be discussed as part of the process of setting the new European Commission's work priorities in November.
In Germany, the European affairs minister, Michael Roth (also from the SPD Social Democrats) said that the type of spending that could be ignored could be future spending on education, research, infrastructure and employment. He explains in an article in French newspaper Les Échos that otherwise, indebted countries would never be able to invest in the future.
This is a view long argued by Italy. During the height of the sovereign debt crisis, in 2012, the Italian prime minister, Mario Monti, called for a similar easing of the SGP.
The two Social Democrat ministers' statements do not amount to a change in the German coalition government's official view because the Christian Democrat finance minister, Wolfgang Schäuble, needs to be convinced - he feels the SGP is flexible enough as it is.
The European Commission is not keen to introduce new legislation. Quizzed earlier this month about the idea of changing the SGP to encourage investment in research and innovation, Euro Commissioner Olli Rehn said that this would amount to compartmentalising EU rules and would go against the principles of simplification and rationalisation of budget rules (see EUROPE 11097). He recommended budget consolidation that is as growth-friendly as possible and focuses on research and innovation to this end. (MB)